Zoomo

P2P transactions of pre-owned cars

Description

Zoomo was a Bangalore-based company that started with the goal of building trust in the Indian used cars market. Unlike many car portals, Zoomo did not open up their marketplace to other car dealers. Instead, it decided to only list cars after thoroughly inspecting them.The card would then be sold through peer-to-peer transactions. Zoomo’s aim was to offer a reliable and trustworthy platform where customers would be assured of the quality of the cars and that they would be given a fair, standardized price. The startup caught the attention of some savvy investors and was able to raise over $7 million through venture capital.

Stats

Category

Transportation

Country

India

Started

In 2014

Closed

By 2016

Number of Founders

Two

Name of Founders

Arnav Kumar, Himangshu Hazarika

Number of Employees

Between 11 And 50

Number of Funding Rounds

2

Total Funding Amount

$6M

Number of Investors

2

Precise Cause of Failure

Bad Business Model

Business Outcome

Shut Down

Cause of Failure

What killed Zoomo
wasn’t lack of funding. In fact, the three Indian founders decided to close
shop and return the money to investors when they still had half of the raised
capital in the bank. They also seemed to have a great team of talented and
committed people.

The problem the venture
had was more related to the Indian market itself. The buy-and-sell automobiles
market was relatively young in India and many of the people that would come to
Zoomo’s site would often be first time buyers or sellers who had close to no
experience in the car transaction market. Customers, in particular, would often
like a certain model but when they checked the price for a similar model on
other marketplaces they would discover that it would often be lower, not
realizing that there might have been hidden reasons for the slashed price tags.
They weren’t able to assign standardized prices to cars based on their
conditions, model and features and the haggling was deeply rooted in the Indian
culture. So, their estimation was that for every 100 cars they inspectioned
they sold only 20, which would not have been sustainable. They changed their
strategy and decided to have a base price for the car and have inspections
performed as an added service for an additional cost. The modification allowed
to sell slightly more cars but not enough.

Zoomo’s team concluded
that the Indian market was not ready and that they needed a more mature
environment to be able to pull off a similar model and make it scalable. After
considering a merger or an acquisition for a brief period, they decided to cut
their journey short and return the rest of the remaining capital.

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Zoomo was a Bangalore-based company that started with the goal of building trust in the Indian used cars market. Unlike many car portals, Zoomo did not open up their marketplace to other car dealers. Instead, it decided to only list cars after thoroughly inspecting them.The card would then be sold through peer-to-peer transactions. Zoomo’s aim was to offer a reliable and trustworthy platform where customers would be assured of the quality of the cars and that they would be given a fair, standardized price. The startup caught the attention of some savvy investors and was able to raise over $7 million through venture capital.

Cause of Failure

What killed Zoomo
wasn’t lack of funding. In fact, the three Indian founders decided to close
shop and return the money to investors when they still had half of the raised
capital in the bank. They also seemed to have a great team of talented and
committed people.

The problem the venture
had was more related to the Indian market itself. The buy-and-sell automobiles
market was relatively young in India and many of the people that would come to
Zoomo’s site would often be first time buyers or sellers who had close to no
experience in the car transaction market. Customers, in particular, would often
like a certain model but when they checked the price for a similar model on
other marketplaces they would discover that it would often be lower, not
realizing that there might have been hidden reasons for the slashed price tags.
They weren’t able to assign standardized prices to cars based on their
conditions, model and features and the haggling was deeply rooted in the Indian
culture. So, their estimation was that for every 100 cars they inspectioned
they sold only 20, which would not have been sustainable. They changed their
strategy and decided to have a base price for the car and have inspections
performed as an added service for an additional cost. The modification allowed
to sell slightly more cars but not enough.

Zoomo’s team concluded
that the Indian market was not ready and that they needed a more mature
environment to be able to pull off a similar model and make it scalable. After
considering a merger or an acquisition for a brief period, they decided to cut
their journey short and return the rest of the remaining capital.